Clear-cut Contracts: How Businesses can Secure Good Contracts with PBMs

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Published on Friday, 03 Jun 2016 04:47 AM / Comments Off on Clear-cut Contracts: How Businesses can Secure Good Contracts with PBMs / 1003 views

For many, a good deal with PBMs is just a dream. At best, you could get contracts that are barely acceptable. Costs remain high and it seems you aren’t as covered as you think you should be. In the end, companies accept this as fact and just go on with deals that are skewed towards the PBM’s benefit.

But the truth is, there’s a way to avoid unfair deals with PBMs. Pharmacy benefits consulting companies point to a single document that could redefine everything: the contract. Here are three ways that help ensure the contract you’re getting with your PBM is a good one:

Clarify Definitions

The primary reason PBMs get a better deal than their clients is because of the vague language used in contracts. When it comes to a PBM-client agreement, clarity becomes an important matter. This is because ambiguity provides PBMs the freedom to interpret the stipulations in any way they want. As a sponsor of the health plan, you get the shorter end of the stick when there is a lack of clear-cut definitions in the document.

Elaborate Guarantees

By default, PBM contracts come with guarantees on the prices of drugs. These guarantees, however, can be quite confusing. Most of these guarantees rely on the ambiguity of contract definitions, particularly “brand” and “generic” drugs. Rebate guarantees are defined as well, although these could be subject to misinterpretation. The classification of both the drugs and the rebates should be reviewed carefully.

Understand Pricing Formulas

Lastly, plan sponsors should focus on the pricing formulas that the PBM uses for the contract. The maximum allowable cost may fluctuate depending on the computation, after all. If this isn’t ironed out, the deal could skew against the favor of plan sponsors.